NZD/USD Rises on Heightened NZ Inflation Expectations

  • NZDUSD
    (${instrument.percentChange}%)

NZD/USD - H4

The Reserve Bank of New Zealand (RBNZ) released its quarterly Survey of expectations, showing annual CPI growth of 3.7% 1 year out (from 3.02% prior) and 2.96% 2 years out (up from 2.27% prior). The report also revelaed mean interest rate (OCR) expectation for the end of the current quarter at 0.75, representing a 25bps increase from current levels. [1]

These expectations make a more compelling case for the central bank to increase interest rates again when it meets on November 24, following last month's first rate hike (to 0.5%) in seven year's.

NZD/USD popped as a result, eying the 0.7075-81, where we encounter the EMA200 (black line) and the weekly highs. A break above this level will allow to challenge 0.7929-35. The bullish cross of the slow stochastic and the contrarian SSI switch back to net short, point to potential for sustained gains.


Past Performance: Past Performance is not an indicator of future results.

On the other, hand the upside clearly has some significant hurdles and a look at shorter time-frames (H1) reveals overbought conditions. This can create selling pressure, but fresh monthly lows (0.6978) that will expose it to the ascending trendline from this year's lows (currently at around 0.6930), will require a catalyst.

Trade the News: View our Economic Calendar

In the absence of any major economic releases today, the pair's move will likely be determined by investor sentiment and we will be on the lookout for any news around Oil and the strategic reserves talk.


Past Performance: Past Performance is not an indicator of future results.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 02 Dec 2021 https://www.rbnz.govt.nz/statistics/m14

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